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Energy Purchase Agreement
I need an energy purchase agreement for a long-term contract to supply natural gas, with flexible delivery schedules and pricing indexed to market rates. The agreement should include provisions for renewable energy credits and a clause for renegotiation in case of significant regulatory changes.
What is an Energy Purchase Agreement?
An Energy Purchase Agreement outlines how a power producer will sell electricity to a buyer over the long term. In Qatar, these agreements typically involve Qatar Energy or major industrial facilities purchasing power from independent power producers under the country's energy regulatory framework.
The agreement sets clear terms for pricing, delivery commitments, and performance standards, offering stability to both parties. For Qatari power projects, these contracts usually span 15-25 years and must comply with Qatar General Electricity & Water Corporation (Kahramaa) regulations, while supporting the nation's Qatar National Vision 2030 sustainability goals.
When should you use an Energy Purchase Agreement?
Energy Purchase Agreements become essential when developing new power generation projects in Qatar, especially for independent power producers working with Qatar Energy or Kahramaa. These agreements protect both buyers and sellers during long-term power supply relationships, typically spanning decades.
Use an Energy Purchase Agreement when launching renewable energy initiatives, building new power plants, or expanding existing facilities in Qatar. The agreement becomes particularly important for projects requiring significant capital investment, as it guarantees steady revenue streams and helps secure project financing. It's vital to have this agreement in place before beginning construction or major equipment procurement.
What are the different types of Energy Purchase Agreement?
- Power Purchase Agreement Solar: Specifically designed for solar power projects, with provisions for intermittent generation and performance guarantees based on sunlight availability.
- Direct Power Purchase Agreement: Used when large industrial consumers buy power directly from generators, bypassing utilities while maintaining grid connection.
- Power Offtake Agreement: Comprehensive agreement typically used by Qatar Energy for large-scale power plants, including detailed capacity payment structures.
- Power Supply Agreement: Simpler structure for shorter-term or smaller-scale power supply arrangements, often used in industrial parks.
Who should typically use an Energy Purchase Agreement?
- Independent Power Producers (IPPs): Private companies that build and operate power plants, signing agreements to sell electricity to major buyers in Qatar
- Qatar Energy: The primary state energy company that often acts as the power purchaser, coordinating large-scale energy projects
- Kahramaa: Qatar's utility regulator that oversees and approves these agreements, ensuring compliance with national grid requirements
- Legal Counsel: Specialized energy lawyers who draft and negotiate terms, ensuring alignment with Qatar's energy regulations
- Financial Institutions: Banks and lenders who rely on these agreements as security for project financing
- Industrial Consumers: Large manufacturing facilities or industrial complexes that purchase power directly from producers
How do you write an Energy Purchase Agreement?
- Project Details: Document the power plant's technical specifications, capacity, and expected commercial operation date
- Regulatory Compliance: Obtain necessary Kahramaa permits and grid connection approvals
- Financial Model: Prepare detailed pricing structure, including capacity and energy charges
- Performance Standards: Define minimum output requirements, availability guarantees, and maintenance schedules
- Risk Assessment: Map out force majeure events, grid stability issues, and fuel supply contingencies
- Stakeholder Input: Gather requirements from technical, financial, and legal teams
- Documentation Review: Our platform streamlines this process by generating customized agreements that meet Qatar's legal requirements
What should be included in an Energy Purchase Agreement?
- Parties and Capacity: Full legal names and authority to contract under Qatar Commercial Law
- Power Specifications: Detailed technical requirements, delivery points, and grid connection standards per Kahramaa regulations
- Payment Terms: Clear pricing structure, including capacity charges and energy payments in Qatari Riyal
- Performance Guarantees: Minimum availability requirements and output specifications
- Term and Termination: Contract duration, renewal options, and early termination rights
- Force Majeure: Events beyond reasonable control, aligned with Qatar Civil Code requirements
- Dispute Resolution: Qatar International Court jurisdiction or arbitration procedures
- Environmental Compliance: Adherence to Qatar's environmental laws and emissions standards
What's the difference between an Energy Purchase Agreement and an Asset Purchase Agreement?
Energy Purchase Agreements are often confused with Asset Purchase Agreement in Qatar's energy sector, but they serve distinctly different purposes. While both involve significant transactions, their core functions and structures differ considerably.
- Transaction Nature: Energy Purchase Agreements focus on ongoing power supply and pricing over many years, while Asset Purchase Agreements deal with one-time transfers of power generation assets
- Duration and Performance: EPAs typically span 15-25 years with continuous obligations, whereas Asset Purchase Agreements conclude once the asset transfer is complete
- Payment Structure: EPAs feature recurring payments based on actual power delivery and capacity availability, while Asset Purchase Agreements involve a single purchase price
- Regulatory Framework: EPAs must comply with Kahramaa's power sector regulations, while Asset Purchase Agreements follow Qatar's general commercial law and asset transfer requirements
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